September 2009 Prepared by Ashpaugh & Sculco, CPAs, PLC
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1 Telecommunications Usage Fees September 2009 Prepared by Ashpaugh & Sculco, CPAs, PLC 1
2 What are they? Fees for operating within the city or county 2
3 Basis for payment Tax basis typically defined by ordinance. May include local telephone service revenue (POTS), service connections (installs), maintenance, some portion of long distance revenue (0% to 100%), enhanced calling services, equipment lease and purchase, private line, and fees (USF and access charges). 3
4 Plain Old Telephone Service (POTS) Typical local phone service, sometimes described as access, i.e. residential access line, business access line. Does not include video or Internet Issue differentiating between telephone and other services (e.g. T1s, DS3s, ISDN, DSL, data) 4
5 Service Connections Installs of service Issue - differentiating between lines of service. 5
6 Maintenance Two forms - service charges and maintenance plans Issue - differentiating between lines of service 6
7 Long Distance Special Terms interstate vs intrastate and interlata vs. intralata Lata is typically an area code Long distance revenue included in local telecom revenues is typically intrastate long distance, which can be both interlata and intralata 7
8 Enhanced Calling Services Additional Features services added on to POTS to enhance the service Come in many variations call waiting, caller ID, 3-way calling, call blocking, call forwarding, voice mail, non-published number, foreign listing, additional listing, toll restrictions, etc. 8
9 Private Line Dedicated facilities, usually to large commercial or corporate users Typical for equipment to be included in charges 9
10 Fees Universal Service Fund (USF) State USF based on intrastate charges Federal USF based on interstate charges Access Charges 10
11 Universal Service Fund (USF) USF - support to promote access to telecommunications services at reasonable rates for those living in rural and high-cost areas, income-eligible consumers, rural health care facilities, and schools and libraries. All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their interstate and international end-user telecommunications revenues. 11
12 Universal Service Fund (USF) (cont.) These charges usually appear as a percentage of the consumer's phone bill. Companies that choose to collect Universal Service fees from their customers cannot collect an amount that exceeds their contribution to the USF. They also cannot collect any fees from a Lifeline program participant. 12
13 Access Fees Access Fees - fees charged subscribers or other telephone companies by a local telephone company for the use of its local network. The FCC allows local telephone companies to bill customers for a portion of the costs of providing access. These charges are not a government charge or tax. 13
14 Access Fees (cont.) Charges may be described as "Federal Access Charge," "Customer or Subscriber Line Charge," "Interstate Access Charge," etc. State public service commissions regulate access charges for intrastate (within a state) calls. In some states, a state subscriber line charge may appear on customer bills. (subscriber line charge) rate set by the FCC 14
15 Fees Follow Revenue If the revenue is included then fee is included USF and Access Fees are part of telecom service 15
16 Other Issues Exempt Revenues Revenues excluded from or exempt from local telecom taxes Companies misclassify exempt Know your laws, including statute of limitations 16
17 Companies Incumbent Local Exchange Companies (ILECs) Competitive Local Exchange Companies (CLECs) Cellular / Wireless 17
18 Questions??? Garth T Ashpaugh, CPA Ashpaugh & Sculco, CPAs, PLC P.O. Box 879 Winter Park, FL gashpaugh@ascpas.com 18
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